In this edition, Tax Return Filers shed light on two indispensable tools that can revolutionize your financial journey – Qualified Business and the Life Time Capital Gain Exemption.
Qualified Business, a coveted status, offers a myriad of tax advantages and investment opportunities. From fostering business growth to attracting investors, understanding the criteria and implications is crucial for entrepreneurs and investors alike.
Meanwhile, the Life Time Capital Gain Exemption empowers you to maximize your profits by minimizing tax liabilities when selling qualified assets. This incredible incentive can pave the way for reinvestment, expansion, and untold financial possibilities.
If you, your spouse or common-law partner, or a partnership (in which you are a partner) are shareholders of a corporation, there is a possibility that these shares could be considered Qualified Small Business Corporation Shares (QSBCS) if certain conditions are met:
Furthermore, if you, your spouse or common-law partner, own a qualified farm or fishing property (QFFP), it may include:
Understanding these conditions is crucial for maximizing the potential tax benefits associated with Qualified Small Business Corporation Shares and Qualified Farm or Fishing Property. Our Tax Return Filers’s experts can help in Business tax planning services in Canada.
|With LCGE||Without LCGE|
|Sales amount after Disposition||S||$ 1,500,000.00||$ 1,500,000.00|
|Adjusted Cost Basis||C||$ 100,000.00||$ 100,000.00|
|Capital gain on sale||CG= S-C||$ 1,400,000.00||$ 1,400,000.00|
|50% of Capital gain is taxable||50%||$ 700,000.00||$ 700,000.00|
|Minus: LCGE limit 2023: $971,190||$ (700,000.00)||$ –|
|Taxable income||$ –||$ 700,000.00|
|Marginal Tax Rate||53%||53%|
|Taxes payable||$ –||$ 371,000.00|
|After-tax amount||$ 1,400,000.00||$ 1,029,000.00|
|Tax savings claiming LCGE||$ 700,000.00||$ 371,000.00|
|LTCGE balance for next use||$ 271,190.00||0|
If you also want to calculate your own income tax that can also be done by the help of our Canadian Income Tax Calculator tools available on our website.
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